Malaysia’s manufacturing sector loses momentum in September as demand softens

Malaysia’s manufacturing sector lost some momentum in September as softer client demand weighed on new orders and production, according to the latest S&P Global survey.

The S&P Global Malaysia Manufacturing Purchasing Managers’ Index (PMI) fell to 49.9 in September from 50.2 in August. The reading below the 50.0 mark, which separates expansion from contraction, ended a three-month period of improving operating conditions.

Malaysia’s manufacturing growth stalls as new orders decline in September

New business inflows declined for the first time in four months, with the slowdown marking the sharpest since June 2025. Manufacturers cited weaker underlying domestic demand, although export orders increased for the second time in three months.

Production volumes were reduced for a second consecutive month, recording their fastest decline in seven months, although S&P Global described the contraction as modest. Purchasing activity also declined as companies reported sufficient inventories and weaker incoming orders.

However, employment continued to expand for a second consecutive month, with job creation reaching its strongest pace since April.

Meanwhile, cost pressures eased further. Input cost inflation slowed for a fifth consecutive month to its weakest level since February, while factory-gate price inflation fell to a seven-month low.

Supply chain pressures increased, with vendor delivery times lengthening amid port congestion, container shortages and higher transport costs.

Despite weaker sentiment, S&P Global expects Malaysia’s GDP to maintain solid growth in the third quarter, with manufacturing output remaining in positive territory.